US home sales up across the country, hopeful sign

Source: The Seattle Times
Americans are buying more homes in every region of the country, the latest indication that the housing market could be on the mend.
By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON — Americans are buying more homes in every region of the country, the latest indication that the housing market could be on the mend. An increasing portion of those sales are from first-time buyers, who are critical to a housing recovery. Sales of previously occupied rose 3.4 percent in April from March to a seasonally adjusted annual rate of 4.62 million, the National Association of Realtors said Tuesday. That nearly matches January's pace of 4.63 million -the best in two years. It is still well below the nearly 6 million that most economists equate with healthy markets. A pickup in hiring and cheaper mortgages, combined with lower home prices in most markets, has made home buying more attractive. While many economists acknowledged that the market has a long way to go, most said the April sales report was encouraging. "The trend in sales is upward, and we think it has a good deal further to go over the next few months as payrolls pick up further and mortgage availability improves," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. Sales rose last month from March in all regions of the country. They increased 5.1 percent rise in the Northeast, 3.5 percent in the South, 4.4 percent in the West and 1 percent in the Midwest. And more first-time buyers entered the market. In April, they made up 35 percent of sales. That's up from 32 percent in March. "First-time homebuyers are slowly making their way back," said Jennifer Lee, an economist at BMO Capital Markets. "That is still below the 40 percent-to-45 percent range during healthy times, but the highest in almost half a year." The report measures completed sales. A sale typically closes a month or two after a buyer signs a contract to buy a home. But a growing number of buyers in recent months have been investors who pay cash, which speeds up the process. The number of buyers who signed contracts to buy homes in April rose to the highest level since April 2010, when buyers could qualify for a federal home-buying tax credit. The increase suggests sales could keep rising in May and June. "People believe that interest rates are as low as they are going to get and that prices have hit rock bottom. So they are getting off the fence," said Tony Geraci, the owner of Century21 Homestar, a real estate firm in Cleveland. Geraci said sales at his firm are up about 15 percent over last year. He credited that to a milder winter this year, better housing conditions and an improving economy. Homes at risk of foreclosure accounted for 28 percent of sales last month. That's roughly in line with March sales but down from 37 percent of sales in April 2011. The decrease in foreclosures helped boost the year-over-year median sales price in April. It rose to $177,400, which is 10.1 percent higher from the same month last year. Rising home sales is the latest sign that the market could be starting to turn around nearly five years after the housing bubble burst. Builders are more confident and are starting to builder more homes. Mortgage rates have never been cheaper. And the job market is improving, which has made more people open to buying a home. Employers have added 1 million jobs in the past five months. And unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April. Still, many would-be buyers are having difficulty qualifying for home loans or can't afford the larger down payments being required by banks. Even some would-be home buyers are holding off because they fear that home prices could keep falling. Previously occupied homes represent 80 percent of the overall home market. Builders have grown more confident since last fall, in part because more people have expressed an interest in buying a home. In May, builder optimism rose to the highest level in five years, according to the National Association of Home Builders/Wells Fargo builder sentiment index. Last week, the Commerce Department reported that builders started work on more homes and apartments in April, pushing housing construction to a seasonally adjusted annual rate of 717,000 homes. That was near a rate of 720,000 homes and apartments being built in January, which had been a three-year high. But even with the recent strength, housing starts remains at roughly half the pace that economists consider healthy. Many economists believe that 2012 could be the year that housing finally makes a positive contribution to overall economic growth. That hasn't happened since 2005, shortly before the housing boom went bust.

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